Home Depot Preps National Ad Push Touting Price Cuts

Struggling Retailer Has Forecast Sales to Slide 5% for Fiscal '08

NEW YORK (AdAge.com) -- In an effort to pick up share from Lowe's and Wal-Mart in a pinched home-improvement segment, Home Depot is cutting prices between 5% and 50% on some 1,200 items. The discounts, which Home Depot expects to be permanent, will go into effect tomorrow and roll out during the next three weeks.
Home Depot's TV spots focus on energy savings and show footage of a store decked out with signs advertising lower prices.' Credit: AP

The company said it plans to advertise the move in a broad-reaching national campaign. Home Depot is rolling out TV, print and radio ads touting "guaranteed low prices, even lower," said spokeswoman Jean Niemi. In-store signage, which will be placed by tomorrow, will also communicate that message. Details of the media buys have not yet been finalized, she said.

Ads created by Richards Group
The TV spots focus on energy savings and show footage of a store decked out with signs advertising lower prices, Ms. Niemi said. Richards Group, the retailer's incumbent creative agency of record, worked on the push; Home Depot is currently in review for its $600 million creative account.

The strategy to become the Wal-Mart of home improvement comes as Home Depot's sales fell 3.4% in the first quarter and 5.4% during the second quarter. Sales at stores open at least year dropped 6.5% in the first quarter and 7.9% during the second quarter. The retailer has forecast sales to slide 5% for fiscal 2008.

An analyst note from Deutsche Bank warns that the promotions could hurt margins, if competitors counter Home Depot's promotion scheme. "The key here is that in this tough macro environment, we're not sure if incremental price promotions will even drive meaningful sales growth," the note states.

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Natalie Zmuda

Natalie Zmuda oversees the CMO Strategy section and is responsible for identifying and analyzing the latest trends impacting chief marketers. Natalie also covers the retail and non-alcoholic beverage categories. She joined Advertising Age in 2008, following five years covering the retail and fashion industries for Conde Nast Publications.